Pandora buys an FM Radio station in a move to lower royalty rates for streaming music. This will definitely make the online streaming space more competitive and interesting
Pandora has complained for years that royalties for internet-only radio stations are too steep. It may have found an end run around the problem, however: it just bought an FM radio station in South Dakota. The company’s Chris Harrison argues that the deal will make ASCAP and music labels offer Pandora the same songwriting licenses that they do to rivals like iHeartRadio, which allegedly gets better terms through its traditional broadcasting roots. Opponents argue that Pandora is simply trying to dodge fair compensation through the buyout, although the streaming service claims to have been forced into more than one unfair rate hike with current licensing. Whatever the truth, Pandora is racing against the clock — competition won’t get any easier when built-in services like iTunes Radio are on the way.